U.S. stocks rise on trade, earnings; bonds fall

BNN Bloomberg's closing bell update: Oct. 21, 2019

Stocks rose amid positive signs on U.S.-China trade talks and as investors awaited earnings from some of the world’s biggest companies. Treasuries fell.

The S&P 500 Index climbed toward a one-month high, trading near the 3,000 level, led by financial and energy shares. Apple Inc. rallied to a record. The Dow Jones Industrial Average underperformed major American equity gauges as Boeing Co. tumbled amid pessimism over the 737 Max crisis. The pound fluctuated on news that the U.K. Parliament won’t vote on Prime Minister Boris Johnson’s Brexit deal Monday.

Investors continued to monitor developments on trade talks between the two largest economies. U.S. President Donald Trump said China has indicated that negotiations over an initial deal are advancing, raising expectations the nations’ leaders could sign an agreement next month in Chile. Earlier Monday, Commerce Secretary Wilbur Ross said it was more important to get details of the deal right than it was for Trump to sign it at the expected meeting with Chinese President Xi Jinping in November.

“What’s most important is that negotiations continue. That will help with confidence,” said Don Townswick, director of equity strategies at Conning, which has about US$171 billion in global assets under management. “Right now, it’s that time of the quarter where just about everything is really laser-like focused on earnings. I’m pleasantly surprised to see the numbers come in this strong early.”

With industry heavyweights McDonald’s Corp., Caterpillar Inc. and Amazon.com Inc. all scheduled to deliver earnings this week, investors will get numerous chances to see how corporations are withstanding the effects of trade tension, slowing growth and Brexit.

“The needle is pointing mildly positive,” David Sowerby, portfolio manager at Ancora Advisors. “As much as the trade issue is a headwind, I think companies are quite sensible in how they are spending their capital on healthy cash flow growth.”

Here are some key events coming up this week:

Canada votes in a national election.
Earnings season is in full swing with companies reporting including: Amazon.com, Microsoft, Daimler, Kia Motors, McDonald’s, Procter & Gamble, Caterpillar and UBS.
Thursday brings monetary policy decisions from the European Central Bank and Bank Indonesia.
U.S. factory orders for business equipment will provide a look into the strength of capital investment in September. The figures will show to what extent the latest tranche of tariffs on China and others is impacting investment decisions.

These are the main moves in markets:

Stocks

The S&P 500 climbed 0.6 per cent to 3,004.95 as of 12:52 p.m. New York time.
The Stoxx Europe 600 Index rose 0.6 per cent.
The MSCI Asia Pacific Index gained 0.4 per cent.
The MSCI Emerging Market Index increased 0.4 per cent.

Currencies

The Bloomberg Dollar Spot Index was little changed.
The euro decreased 0.1 per cent to US$1.1152.
The British pound was little changed at US$1.298.
The Japanese yen weakened 0.1 per cent to 108.56 per dollar.

Bonds

The yield on 10-year Treasuries climbed four basis points to 1.80 per cent.
Germany’s 10-year yield increased four basis points to -0.34 per cent.
Britain’s 10-year yield gained four basis points to 0.75 per cent.

Commodities

The Bloomberg Commodity Index decreased 0.6 per cent.
West Texas Intermediate crude fell 1.2 per cent to US$53.15 a barrel.
Gold dipped 0.4 per cent to US$1,488.50 an ounce.

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